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Measuring The Trade Balance In Advanced Technology Products

Author

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  • Robert H Mcguckin
  • Thomas A Abbott Iii
  • Paul E Herrick
  • Leroy Norfolk

Abstract

Because of the dramatic decline in the United States Trade Balance since the early 1970's, many economists and policy makers have become increasingly concerned about the ability of U.S. manufacturers to compete with foreign producers. Initially concern was limited to a few basic industries such as shoes, clothing, and steel; but more recently foreign producers have been effectively competing with U.S. manufacturers in automobiles, electronics, and other consumer products. It now seems that foreign producers are even challenging the dominance of America in high technology industries. The most recent publication from the International Trade Administration shows that the U.S. Trade Balance in high technology industries fell from a $24 billion surplus in 1982, to a $2.6 billion deficit in 1986, before rebounding to a $591 million surplus in 1987. As part of the efforts of the U.S. Census Bureau to provide policy makers and other interested parties with the most complete and accurate information possible, we recently completed a review of the methodology and data used to construct trade statistics in the area of high technology trade. Our findings suggest that the statistics presented by the International Trade Administration, although technically correct, do not provide an accurate picture of international trade in high or advanced technology products because of the level of aggregation used in their construction. The ITA statistics are based on the Department of Commerce's DOC3 definition of high technology industries. The DOC3 definition requires that each product classified in a high tech industry be designated high tech. As a result, many products which would not individually be considered high tech are included in the statistics. After developing a disaggregate, product- based measure of international trade in Advanced Technology Products (ATP), we find that although the trade balance in these products did decline over the 1982-1987 period, the decline is much smaller (about $5 billion) than reported by ITA (approximately $24 billion). This paper discusses the methodology used to define the ATP measure, contrasts it to the DOC3 measure, and provides a comparison of the resulting statistics. After discussing alternative approaches to identifying advanced technology products, Section 2 describes the advanced technologies in the classification. (Appendix A, provides definitions and examples of the products which embody these technologies. In addition, Appendix B, available on request, provides a comprehensive list of Advanced Technology Products by technology grouping.) Having described the ATPs, Section 3 examines annual trade statistics for ATP products, in 1982, 1986, and 1987, and compares these statistics with equivalent ones based on the DOC3 measure. The differences between the two measures over the 1982- 87 period stem from changes in the balance of trade of items included in the DOC3 measure but excluded by the Census ATP measure; i.e. the differences are due to changes in the trade balance of "low tech" products which are produced in "high tech" industries. This finding corroborates a principal argument for construction of the ATP measure, that the weakness of the DOC3 measure of high technology trade is the level of aggregation used in its construction. It also suggests that at the level of individual products the high technology sectors of the economy continue to enjoy a strong comparative advantage and are surprisingly healthy. Nonetheless, some areas of weakness are identified, such as low tech products in high tech industries. (Appendix C, supplements this material by providing a detailed listing of traded products included and excluded from the Advanced Technology definition for each DOC3 high tech commodity grouping. These Tables enable the reader to directly assess the Census classification.)

Suggested Citation

  • Robert H Mcguckin & Thomas A Abbott Iii & Paul E Herrick & Leroy Norfolk, 1989. "Measuring The Trade Balance In Advanced Technology Products," Working Papers 89-1, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:89-1
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    File URL: https://www2.census.gov/ces/wp/1989/CES-WP-89-01.pdf
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    References listed on IDEAS

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    1. Sveikauskas, Leo A, 1983. "Science and Technology in United States Foreign Trade," Economic Journal, Royal Economic Society, vol. 93(371), pages 542-554, September.
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    Cited by:

    1. Albert N. Link & David Paton & Donald S. Siegel, 2005. "An econometric analysis of trends in research joint venture activity," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 149-158.
    2. Godin, Benoit, 2004. "The obsession for competitiveness and its impact on statistics: the construction of high-technology indicators," Research Policy, Elsevier, vol. 33(8), pages 1217-1229, October.
    3. Sanjaya Lall, "undated". "Turkish Performance in Exporting Manufactures: A Comparative Structural Analysis," QEH Working Papers qehwps47, Queen Elizabeth House, University of Oxford.
    4. Douglas W Dwyer, 1995. "Whittling Away At Productivity Dispersion," Working Papers 95-5, Center for Economic Studies, U.S. Census Bureau.
    5. Ron Jarmin, 1995. "Using Matched Client And Census Data To Evaluate The Performance Of The Manufacturing Extension Partnership," Working Papers 95-7, Center for Economic Studies, U.S. Census Bureau.
    6. Lawrence Edwards & Phil Alves, 2006. "South Africa'S Export Performance: Determinants Of Export Supply," South African Journal of Economics, Economic Society of South Africa, vol. 74(3), pages 473-500, September.
    7. Link, Albert N. & Paton, David & Siegel, Donald S., 2002. "An analysis of policy initiatives to promote strategic research partnerships," Research Policy, Elsevier, vol. 31(8-9), pages 1459-1466, December.
    8. Julie A. Silva, 2008. "International Trade and the Changing Demand for Skilled Workers in High-Tech Manufacturing," Growth and Change, Wiley Blackwell, vol. 39(2), pages 225-251.
    9. Amanda Driver & James Hodge, 2000. "Understanding the high tech sector in the Cape Metropolitan Region: a contribution to the development of a regional strategy for high tech industry," Working Papers 00037, University of Cape Town, Development Policy Research Unit.

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    Keywords

    CES; economic; research; micro; data; microdata; chief; economist;

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